China ‘s currency plays prices not seen since the great devaluation of August 2015.
The currency of South Africa leaves the barrier of 12 points against the ‘greenback’. Turkish lira and weight also operate with ascents.
The biggest drop of the dollar in one day since March, following several sessions of weakness ‘Greenback’ is all they need currencies of developing powers to fire. And this time was no different. The Thai baht, Malaysian ringgit and the Singapore dollar have climbed to multiyear highs, while the yuan from mainland China has left a record since 2015 at 6.3135. But the coin has attracted the attention of investors has been the South African rand, which has appreciated until 11.8755 units, breaking the barrier of the 12 rands for the first time since May 2015.
Operators, who had already begun to shelve the US currency amid fears that Trump returns to the fray with their protectionist measures and to start the dreaded trade war with China, gave way to a wave of sales on all fronts after the words of US Treasury secretary, Steven Mnuchin saying that embraces “a weaker dollar.” Demand for assets in emerging markets is very strong for several days by the gradual weakening of the US currency. In the words of Guillaume Tresca of Credit Agricole, this appetite for currencies of these countries’ she has been ‘in crescendo’ for some time, but is stronger in the last two sessions. “
And it has been particularly significant against yuan. The last time the currency changed hands in the vicinity of 6.30 units against its US counterpart was during the wave of devaluations of the Government of Xi Jinping in August 2015 when it depreciated by over 3% in less than 72 hours, reliving the echoes of the ‘hackneyed’ currency war. Now the renmninbi accumulates an appreciation of 10% from its worst historical mark in December 2017 and 3% in 2018 so far.
Moreover, the rand has soared 20% since November, ague which originated in “good geopolitical news of the country, centered in the hopes of being a shift towards a more stable leadership,” said Tresca.
TURKISH LIRA AND THE MEXICAN PESO
Elsewhere, the Turkish lira also leaves a rally to the 3.7435 units. the recovery of this currency against the dollar, which has also been marked by political tension is evident, though less acute than the rand.
The Mexican peso, on the other hand, another of the hardest hit currencies since the election of President Donald Trump seen up to 18.45 pesos per dollar, despite the pressures to which has been subjected the country US threats to withdraw from the Free Trade Agreement of North America (NAFTA by its acronym in English).
The picture could continue in these developing markets because investors are overweighting and underweighting dollar currencies in economies where growth is fast, says Ben Sy, JP Morgan, adding pressure on the “greenback”. “People have to reduce their positions in dollars or reducing underweight positions in emerging market currencies,” warns.